An IRA informer who claimed Mr Martin McGuinness told him he fired the first shot on Bloody Sunday was paid up to £25,000 a year for providing information to the state, it emerged today.
His MI5 handler, known only as Officer A, described Infliction as a "reliable agent", although he admitted he lied and invented intelligence on a number of occasions.
Officer A, who currently heads the MI5 section dealing with Irish terrorism, told the Saville Inquiry in London there were differing views within the intelligence community about Infliction's reliability.
But he said he was the person best suited to provide evidence of the informer's reliability as he had had most contact with him while working as his handler in 1984.
"He was for the most part, a very reliable agent," he said.
During a debriefing in April 1984, Infliction allegedly told Officer A that Mr McGuinness told him he fired the first shot on Bloody Sunday.
Mr McGuinness, who has admitted to being the Provisional IRA's second-in-command in Derry in January 1972, has denied the allegation.
He has also instructed his lawyers not to question MI5 personnel about the claim because Infliction will not be appearing before the inquiry and because of the restrictions imposed on questions to Security Service personnel.
In a telegram to Security Service Head Office on April 16th, Officer A wrote: "Martin McGuinness had admitted to Infliction that he had personally fired the shot (from a Thompson machine gun on 'single shot') from the Rossville Flats in Bogside that had precipitated the Bloody Sunday episode."
Officer A told the inquiry at Methodist Central Hall today he had had many previous conversations with Infliction about Mr McGuinness before this meeting but this was the first time the informer had raised the Sinn Féin man's actions on Bloody Sunday.
He said he was now sure that the discussion between Mr McGuinness and Infliction took place "fairly soon" after Bloody Sunday and said he believed it was truthful.
"I cannot think of any credible reason why Infliction should have lied about this particular issue," he said. "He was not asking for, nor did he ask for, any additional payment for this piece of information, he did not dislike or resent Mr McGuinness as far as I know, and certainly never said that he did."
However, the officer said information provided by Infliction was not always truthful. "For the most part Infliction's reporting was reliable and, in our view honest," he said. "However, there were some areas where he was not prepared to provide information and there were a small number of occasions on which, we believe, that he did not tell the truth."
Officer A said the sums paid to Infliction were at the top end of the scale of those paid to agents because it reflected the "access he had to information about the IRA, the potential of the case and the risks that he ran in obtaining it".
Officer A said Infliction was paid between £15,000 and £25,000 a year, which was partly made up of salary and bonus payments. He said bonus payments were not made for particular pieces of information, but on occasions when he had "worked particularly hard to get information about a difficult area or his information over a period had been extremely good".
Officer A explained that Infliction had been an informer for a "matter of years" before he became his handler in 1984, although he was not an agent in 1972 at the time of Bloody Sunday. He ceased to be paid for information some time before 1993.